The cryptocurrency market has faced significant turbulence following the unexpected declaration of martial law by South Korean President Yoon Suk Yeol. The decision has created a notable divergence between the global and local prices of major cryptocurrencies.
Bitcoin fell to $79,000 and XRP traded at $1.89 on Upbit for over an hour, prompting users to flock to exchanges to register buy orders and acquire these assets at a lower price.
A Brief Chaos in South Korea’s Crypto Market
The political crisis began when President Yoon declared martial law on Tuesday night (3), prompting military forces to attempt to enter parliament. Yoon justified the measure as necessary to combat “pro-North Korea anti-state forces”.
The announcement sent the country’s economy into momentary chaos. The price of the South Korean Won surged against the dollar, providing a brief crypto arbitrage opportunity for USDT holders. Bitcoin plunged more than 30% on South Korean exchanges, including Upbit, while it fell just 2% on global markets.
The sharp difference reflected both panic selling by local traders and a nearly 3% increase in the USD/KRW exchange rate.
Fonte: Upbit
According to data from Lookonchain, over $163 million worth of USDT flowed into Upbit alone, while many investors placed large USDT orders. However, lawmakers, including the president’s own party leader Han Dong-hoon, quickly defied martial law to restore order to the economy.
Parliamentary opposition proved effective, with lawmakers voting to reject the declaration of martial law on Wednesday morning. Markets stabilized following parliament’s intervention, with Bitcoin holding steady at $95,167 after briefly surpassing $96,000.
Prediction markets react
Political uncertainty has spilled over into crypto prediction markets, with Polymarket launching a betting pool on President Yoon’s possible resignation.
The market asks whether Yoon will step down between December 2 and December 31, 2024. So far, approximately $257,000 in bets have been placed, with a 61% probability assigned to the president's resignation.
The episode highlights the growing interconnection between political stability and the cryptocurrency market, especially in regions with high crypto adoption such as South Korea.
Polymarket Odds on South Korea's President. Source: Polymarket
Throughout this year, the local market has seen increasing user activity despite regulatory challenges. As reported by BeInCrypto in October, the country saw a record 67% increase in daily trading volume, reaching 6 trillion won.
However, exchanges, particularly Upbit, have continually faced regulatory hurdles. In November, financial regulators flagged 600,000 potential KYC violations at the company. These violations have threatened Upbit’s license renewal despite the exchange’s commitment to transparency.
Regulators have also launched an investigation into Upbit’s potential monopoly in the country. The exchange is also accused of being associated with pump-and-dump schemes, exploiting regulatory loopholes and drawing criticism.
At the same time, nearly 35% of cryptocurrencies on various South Korean exchanges were delisted, with half lasting less than two years. These delistings resulted in huge losses for investors due to declining liquidity and falling prices on inaccessible coins.
The article Cryptocurrencies go on ‘sale’ in South Korea amid political crisis was first seen on BeInCrypto Brasil.
